THE ECONOMY
The good ship Europa heads into the icepack
JOCK BRUCE-GARDYNE
Important decisions,' as the Prime Minister sensibly reminded us at the end of last weekend's London Euro-Summit, `have to be turned into practical effect.' `The one', she apparently added somewhat delphically, 'is no good without the other — and we have been doing the other.' Aids, for example: the heads of Govern- ment are very much against it. That was a proposition, as someone pointed out, which even the Greeks could be expected to go along with (as indeed they did). Our Foreign Office must have been proud of their handiwork. It has taken them a long time to persuade the Prime Minister that carpets are for sweeping awkward subects under, not for chewing. So the good ship Europa sails serenely on into the ice-pack. Chief Mate Jacques Delors, President of the Brussels Commission, is already sing- ing 'Nearer, my God, to thee' at the top of his voice. But at the Captain's table they are sitting down to dinner.
Two years ago the Fontainebleau settle- ment was supposed to herald 'a new spirit of realism' in Community affairs. One and all were committed to 'budgetary disci- pline' — with particular reference to agri- cultural appetites — and the rebate on our subscription pledged to Mrs Thatcher meant that the French would join us and the Germans as net contributors to Com- munity resources. Admittedly one and all had also agreed to increase the Commun- ity's automatic income by raising its levy on national VAT revenues from one per cent to 1.4 per cent. But that was not going to permit the agricultural ministers to live the life of Riley, we were solemnly assured, since in future the three heavyweights would all have a vested interest in cutting down expenditure, instead of only two.
Even at the time this sounded optimistic. The Germans, after all, had been 'net contributors' to the Community budget from the word go, and this had not deterred them from clamouring at each agricultural price review for yet more unrealistic prices to satisfy the weekend peasants who build the cars in Munich. True, French farmers, being vastly more efficient than their German brethren, could get by on smaller subsidies. But there are far more of them, and it always looked more likely that British impatience for reform of the common agricultural system would be softened by our Budget rebate than that the French would summon up the courage to defy their aggressive farming lobby just because they had to help to foot the bills. So it has proved. It is very hard to believe that Mrs Thatcher would have settled for a Euro-Summit exclusively devoted to the eradication of Aids and terorrism before she got 'our money' back. As it was, London was what President Mitterrand called 'a summit be- tween two capital decisions'. What is the next one going to be?
London offerred pointers: and they were nothing if not ominous. M. Delors calcul- ates that the Community's 'creative accountancy' is approaching its term. In 1987 the farm budget will, on current commitments be in the red to the tune of around £3 billion. Another increase in the level of national VAT contributions to 1.6 per cent, darkly hinted at Fontainebleau, would not suffice to bridge the gap. But our precious Budget rebate is also on the line, as the Prime Minister acknowledged to Parliament. For when the Fontainebleau deal runs out of time, as it is certain to do in 1987, then the rebate is in jeopardy.
Miracles are always possible. France's Agriculture Minister M. Francois Guil- laume, the hero of many a stand at the barricades of the French farmers' union which he used to lead, tried a smart one on the Americans the other day. He suggested that the world's leading cereal producers, including the Community and the US, should come to the assistance of the starving Third World millions by forming a cartel to put their export prices. The American response was unprintable, Failing miracles, the prospect looks familiar. am not,' the Prime Minister warned after the London summit, 'going to give up' the budget rebate organised at Fontainebleau 'until I have got a better one, or at any rate one as good', adding the reminder that any proposal the VAT levy to the Community required ratification by all the parliaments concerned. Precisely so. We head towards a repetition of the 1984 bargain. If we do not agree to first a supplementary budget and then another increase in the Community's 'own re- sources', then we can whistle for our rebate. So we get another rebate, and in return concede another increase in the kitty for agriculture ministers (and since 1.6 per cent of VAT receipts will not suffice, we shall apparently be expected to hand over a proportion of each member's GDP instead). Coupled, of course, with another 'Solomon Binding' pledge by all concerned to stringent budgeting. And the stately minuet resumes.
So does the Dutch auction for the custom of the purchasers of last resort of the food surpluses of the northern hemis- phere, and foremost amongst them, according to the recent calculations of the World Bank, the Soviet Union. Meanwhile the net benefits of the common agricultural policy, intended originally for the peasant farmers who have seen little profit from it, have shifted from the barley barons of the Beauce and East Anglia to the storage merchants. And even they are growing wary as the conviction spreads that nemesis approaches. Critics of the lunacies of agricultural politics around the globe, by which the industrialised countries transfer resources from the large majority of town-dwellers to small minorities in the countryside, while the Third World does precisely the reverse, are met with the answer that it may be daft, but that is politics. Best to tinker as we may, with deterrent levies on excess milk production, and inducements to arable farmers to 'set aside' their acreage and return it to haunts of coot and hem, and concentrate instead on making sure that the French and Germans pay for it as well as us. Levies or no levies, the butter mountain grows, and we can be sure that land left fallow for a good consideration would soon return to cultivation for a second golden handshake.
Sooner or later — and not much later now — the farm support cartels will go the way of Opec, collapsing under the weight of their own contradictions. Were the Community governments to insist that their farming ministers must make do with the funds already committed to them, farming incomes would inevitably suffer. But if instead — as seems all too likely — they are enabled in 1987 once again price make do and mend, the eventual price collapse will be far more painful and disruptive. More painful and disruptive, maybe, than the fabric of the European Community can sustain.
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